German business confidence dropped for the first time in five months in March on fears the Crimea crisis will hurt trading with Russia.

Ifo Institute's business climate index fell to 110.7 in March from 111.3 in February, surprising analysts who had expected a reading of 110.9.

The European Union and US have introduced sanctions against a number of individuals after Russia signed a treaty annexing Crimea from the Ukraine.

The Group of Seven leaders said they will not attend a planned G8 meeting which was to be held in at Sochi, the Russian site of the Winter Olympics, and will instead hold their own summit in June in Brussels.

UK inflation

The UK´s consumer price index (CPI) rose 0.5% month-on-month and 1.7% year-on-year in February, according to the Office for National Statistics (ONS).
In January inflation fell 0.6% month-on-month and rose 1.9% year-on-year.

The consensus estimate had been for a reading of 0.5% on the month and 1.7% year-on-year.

The dip in inflation is likely to support the Bank of England's (BoE) message that it will keep interest rates low for some time. The BoE is targeting inflation of 2%.

ECB stimulus not off the table, says Weidmann

Bundesbank President Jens Weidmann said on Tuesday that he didn't completely rule out the possibility of the European Central Bank (ECB) embarking on a new quantitative easing (QE) programme, although he felt there would need to be more discussion on the issue.

Weidmann, a typically hawkish member of the ECB, reportedly told MNI in an interview published on Tuesday that the monetary authority needed to debate further on its next steps.

"The unconventional measures under consideration are largely uncharted territory. This means that we need a discussion about their effectiveness and also about their costs and side-effects," Weidmann was quoted as saying in a statement in line with his hawkish bias.

"This does not mean that a QE program is generally out of the question."

easyJet soars

easyJet moved higher after the European airline raised its guidance for the first half to a pre-tax loss of £55m to £65m from a January estimate for a loss of as much as £90m.

Royal Mail declined after the UK postal service said it plans to cut about 1,600 jobs.

Luxottica advanced as the world's largest maker of glasses said it will design, develop and sell spectacles that use Google Glass technology.

Baloise gained after the Swiss insurer unexpectedly increased its dividend.

Kingfisher jumped after reporting a rise in annual adjusted pre-tax profit that beat the consensus forecast.

The euro fell 0.24% to $1.3806.

Brent crude futures rose $0.308 to $107.140 per barrel, according to the ICE.

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